Friday, June 30, 2017

Old picture into new post

Old picture using PH.D.(press here, dummy) camera with no touching up.

Thursday, June 29, 2017

Lost in translation



No automatic alt text available.

It makes perfect sense in Chinese but not in the translated English. That must be translated using a dictionary without any knowledge of the language. I found this sign in a tourist attraction more than a decade ago.

20th Anniversary of takeover of HK on July 1

Hong Kong's current political system still has 30 years to go according to the late Deng. But, there is no confirmed date. Hong Kong is quite wealthy due to its proximity to China and Macau is wealthy due to Chinese gamblers.
"One Country, Two Systems" is a smart idea. If it works well to Hong Kong and Macau, it will lure Taiwan to the mother land. Independence is no compromise for these 3. Taiwan at one time wanted to return to China to rule by force, so it told the world that it was one China.
Have been busy moving half of my portfolio to CDs... The market is too risky for me, a conservative investor.
http://tinyurl.com/y8q...

Wednesday, June 28, 2017

Who benefits?

Another virus attack world wide. The sales of anti virus software must be boosted.

I upgraded my Malwarebytes for 2 years recently. It is free for the basic version that is quite decent to me. It is a marketing scheme that gives you a free product and ask you to buy the upgraded product. I give out a lot of books (over 100 this month) on basic stuffs expecting to buy my other books such as the full versions or the Complete the Art of Investing.

BRExit

On Britain's exit from my blog.

I predict EU will be dissolved or at least not in the same form as today within 5 years for the following reasons:

1. Most EU countries do not welcome refugees / immigrants esp. from Middle East. They have too many bad experiences. I'm sorry about the Syrian refugees. Most complain they have lost their own national characters.

2. A common currency is only good for tourists and some small countries would enjoy it. If we let Greece to depreciate its own currency, they would recover faster.

3. It allows countries to cheat easily.

Argentina

Do not cry for me, Argentina. Stay away until you're sure it is close to the bottom.

I wrote sth similar here or in my blog:

Argentina is going to bust when you see:


1. Long lines in basics such as milk.
2. You can get a lot more the exchange from USD in black market.


Socialism is self destructive when there is nothing to give (i.e. the parasites will die when the host dies). US, take notes!

My market prediction

IF my PREDICTION is right and technical chart is better way to detect:

Using 2008 as a market cycle.
Peak. 2007 and 2017.
Market plunge. 2008 and 2018.
Recover. 2009, ? (let the chart do the work).

Every market is different. Today the market is fundamentally not sound but technically sound. Again, it is based on a prediction that may not materialize. The market only crashes when both fundamentals and technicals are bad.

As in stocks, the over-value market could stay for a long while.

Russell rebalance

Russell will have a big impact today to reconstitute its stocks in the indexes.

From my experiences, the 1000 will be stronger at the expense of 2000 and 2000 will be stronger than 3000 at the expense of 3000. It is the results of promotions and demotions.


The stocks delisted from 3000 are usually losers and even a bigger losers for the coming months.
I did some research before. The promoted stocks (after the date of promotion) are doing better than the average in the coming year. With a historical database it is quite easy to test past performances as below.


It is even more profitable if one can determine which stocks are going to be promoted. Not a easy task.


For example in one year ago, find the stocks that were not in the index (such as 1000) before the reconstitution and they were in the index after, check the performance one year later.
However, today the market is risky, so do not bet your farm on it.

Wealth gap is widened

We're the victims of our success. We have regulations to 'protect' our workers and environment. Our children want to enjoy life more... Most cannot compete with their counterparts in the Far East. Our politicians buy votes by giving generous welfare. Why they want to take a job that means taking out the free health care?

The worst has yet to come. For every 10 jobs returned from China or Mexico, only one job is gained due to automation and robots. The rich will be richer as the companies will be more profitable by hiring fewer employees.

Risky market

The market has been heating up for sure but it is over-heated. In addition, the economy and the market has been non-correlated for a long, long while. It will correlate again and then the market will face reality (and likely crash).

When everyone including the shoe-shine boy invests in the market, the market is risky.

Today the market is fundamentally unsound but technically sound. Run when it is technically trending down.


My blog on detecting market crash:
http://tinyurl.com/nmo...

Common wrong formula


This formula to calculate return (b-a)/a is wrong. It should be (b-a)/abs(a) to take care of negative numbers.

Null is not zero

I asked Kiera, who is going to Kindergarten, "What is the difference between 'none' and 'zero'?". She drew a zero in the air to represent a 'zero' and opened her hands to represent 'none'. She may understand the concept of zero and none.

I'm working on averaging returns. For example, when you have a return of 100% in one year and a return of 0% in another year, your average return is 50%.

In another year, you do not have a return for some reason such as no data available for that year. The average of the two years with 100% in one year and no data in another year (programmers understand the concept of null better) is 100%.

Smart, luck or I'm data-fitting (an investing term) - you decide. Or, I have too much free time to make you waste your valuable time to read this post. LOL.


Wednesday, June 21, 2017

Good vacation photo

On the same vacation.

Cheap camera and the photo never been touched. Just good timing I guess.

A 'bargain' is not a bargain


Going thru my vacation photos,the liquor is $90 in my recent cruise in Europe. Adjusted for size, it only costs $74 in Mass. Why pay extra and carry it all the way from Europe and at the risk of paying extra for luggage? This is one example of many.

Sorrows of China



China has many sorrows of natural disasters. The rise of China reduces many of them and hopefully in the coming decade, they will be memories. According to me, China’s priorities are food, shelter, job, living conditions (air, water, quality of food, health care…), protection from natural disasters, corruption, human rights…

China has ample housing, so it is not a major problem now. China is spending her effort in improving the living conditions. From the last decade, China can take care of herself from natural disasters such earthquakes and flooding disasters.

If it is not used for taking out political enemies, President Xi has accomplished a lot in suppressing corruption. Corruption is so widely spread and could be part of the culture, so it is not a small task. Compared to 30 years ago, human rights have been improved by leaps and bounds.

For the last 250 years, food has always been a problem. Today no Chinese starves to death, but it is a long way to compare to developed countries. The rich is literally eating all the better food produced by the world. I used to have a twin lobsters for $15 in many Chinese restaurants in Boston a couple of years ago and now it costs $35. Literally they fly or swim over to China. The poor countries suffer as more food is distributed to China compared to 25 years ago. About 25 years ago, I ate rice in China that had been in the stockpile for 5 years. It tasted bad.

China has 7% of the world’s arable land but 19% of the world population. That’s why China needed the ‘one-child policy’ while India’s huge population would eat all the limited food resources. The younger population will not help India as expected by many experts.

Coupled with the problem of few arable land per capita, China’s crop yields are poor compared to developed countries. Chinese farmers use too much fertilizers and chemicals that pollute the soil and land. The government banned GMO seeds with political reasons. As a result China is behind in GMO seed development which is important.

The industrial advances lead to migration of farmers to cities leaving the elderly farming the land. Many farm lands are also polluted by industrial wastes. China should encourage and subsidize farming for many reasons.

China today depends too heavily on farm products from S.E. Asia, US and Australia. It leads to the security to protect the import from her neighbors. Carries and a stronger blue water navy have been being developed for this purpose besides invading Taiwan.

A big drought or a big flood could starve her citizens and escalate to riots against the government. Most Chinese villages have electricity and basic machines/tractors. They also have good roads/railroads compared to most developing countries. They have adequate education on farming technology and management.

It is NOT enough! China government bit the bullet by letting ChemChina to acquire Syngenta, a Swiss company and a world leader in insecticides, herbicides and the No. 3 producer of seeds. It costs China $43 billion and far more expensive than her second largest acquisition of Nexen at $15 billion.

It makes a lot of sense in the cost (though huge by any standard) and benefit. China may not be able to buy a US company due to our congress on security reason. Technology transfer is too restricted, too little and too late.

Overnight, China becomes one of the top three companies in this sector. It bought the global market share too beside the benefit for feeding the world population including China. It will provide better food quality required by her wealthier citizens. With the commitment and huge pool of Chinese scientists, China will catch up fast. It looks great for China and the world. Today China does help many poor countries especially in Africa on farming.


Links




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The above is from my book "Can China Say No?". Click here for more info in Amazon.com. 

Saturday, June 17, 2017

Happy Father's Day

I recycle the following post from Mother's Day - only the last two sentences changed.
The following is my translation from some one's recent work (sorry, cannot find the name of the author). Hopefully I did not do a bad job to do injustice to the author. I changed some words as some could not be translated effectively. The poem is simple but very touching. If you do not feel anything, please rush to the nearest clinic to check what's wrong with you. :)

There is more in life than making money.

-----------------
I cried two times that are unforgettable in my life.

The first time when I started in this world.
The second time when you ended in this world.

The first time I do not know but from your mouth.
The second time you do not know but from my heart.

Between these two crises, we had endless laughs.
For the last 30 years, the joyful laughs had been repeated, repeated...

You taught me every lesson in life.
I remember every lesson for the rest of my life.


Friday, June 16, 2017

Bank / Broker's accounts pay virutally zero interest

Important notice. I'm not liable for any of your losses and will not share your gains. I'm not a professional in finance. Consult a professional before any actions.


I have sold many stocks to prepare for a market crash. I’m a very conservative investor. Do not follow my actions exactly as everyone’s situation is different. Adjust your actions according to your risk tolerance.

As of 6/2017, the market is still making new highs. Using my own prediction, today may be similar to 2007, the peaking phase of the last market cycle.

I had too much cash and most were in money market funds in my brokers’ accounts. One-year CDs pay about 1.3%. After inflation and taxes, it is a loss, but it is far better than virtually nothing from the money market funds.

Our financial system punishes us for not taking risk. However, at market peaks, we need to play defense with conservative investments such as CDs.

The durations of my CDs depend on when I need the cash to buy contra ETFs such as SH during a predicted market plunge. I predict and plan if the market will not crash in 3 months. Even if it will, I should have enough cash then within a short period of time.

Another consideration is the interest hikes. I predict there would be 0.5% increase in 6 months. Hence, all the new CDs in 6 months will have 0.5% increase in interest in theory.

We can “ladder” the CDs letting them to mature in different months. For example, we can have one CD maturing in 3 months and another one in 12 months. When the first CD matures, we renew it for another 3 months. In this method, we always have cash in 3 months and one CD has a higher interest rate. The more the CDs, the better the distribution.

Ensure that the FDIC limit of $250,000 is per bank, NOT per account. Some CDs from foreign banks which are also insured by FDIC offer higher interest such as the Bank of China.

Some states offer special favorable treatments for taxing interest for CDs from local banks. Being a Mass. resident, I prefer local banks. However, the CDs from my brokers make it easy to trade and select better rates. In one case, my bank offers a special CD deal of 1.55% for 14 months. It saves me about $200 for 2 trips.

Do not select CDs that are callable. It means the banks have the right to cancel the deal to their advantage. It is no longer a popular feature – you can cheat folks sometimes, but not all the times. Try to select the CDs having the settlement date closest to today’s date. Otherwise, you do not get interest on the extra days.

For the last 5 years, SPY is returning 15% and beats the 1.3% CDs by a good margin. Today buying CDs is an insurance bet. When the market crashes, it usually is fast and deep.

SPY, simulating S&P 500, is market cap weighted. It means Apple has far larger share than the other 499 stocks. The top five stocks are the rocket stocks to me. It would be less risky if the 500 stocks are evenly weighted.

Besides CDs

You may also consider bond funds and bond ETFs. They have higher dividends but they are more risky. Today I do not consider long-term bonds. Their performances are inversely proportional to the interest rate.  I predict there will have interest hikes. Short-term (less than two years for me) bonds are fine to me.

Compare the performances of the bond funds. Most make a mistake by comparing the current performances. You should compare their performances during market peak such as 2007 and 1999.

The two ETFs I consider are HYG and JNK. Their annualized returns are compounded. SPY is the bench mark.

2008, the year of the market crash to most, was a bad year for bond funds and ETFs. Based on this, I would sell them when the market crashes. However, in 2009 both recover from the previous losses quite nicely.


2007
2008
2009
HYG
3%
-18%
29%
JNK
Not avail.
-25%
38%
SPY
5%
-37%
26%



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1. For those who are into Sector Rotation and Momentum. New book.
Click here for Swing Investing 3rd Edition (Sector Rotation + Momentum)
or enter into your browser https://www.amazon.com/dp/B06XRQ1MMS

 2. Sector Rotation.
Click here or type the following
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3. For couch potatoes. It is simple, rewarding and requiring only 30 to 60 minutes every month. New book.

Click here for more info.
or enter into your browser: https://www.amazon.com/dp/B072L1NZVB

4. If you're  not too deeply into sector rotation. Complete The Art of Investing (Kindle version has over 870 pages) is the most cost effective. It misses several chapters on sector rotation that I wrote recently.
Click here for more info. or type the following
http://www.amazon.com/dp/B01AASN2GA

5. Profit from market crash in 2017.
Click here for more info or type the following.
https://www.amazon.com/dp/1537509152